Today’s focus turns to JPY & EUR

USD rally stalls

As the USD rally stalls, the US NFP data had its usual 50-70 spike up and down on the release of the US data but once the market settled down there wasn’t much change in the majors or the value of the USD index.

The USD index jumped to 92.90, the highest level since Dec. 28, before drifting back to 92.56, basically where it was trading before the data was released. And that’s no surprise as the data was relatively mixed:

Non-Farm Payrolls +164k v 192k forecast

Unemployment Rate 3.9% v 4.0% forecast (drop in participation to 62.8% v 62.9%)

Average Earnings MM +0.1% v +0.2% forecast

The stronger unemployment rate offsets the general weakness in the payroll data.

So as the USD rally stalls. We’re basically back to where we were before the data was released and the big question is does the trend continue on that data or do we see a pause and maybe a relief rally on the majors before the USD goes again?

I’m thinking we need a relief rally (or dip as far as the USD is concerned) to refresh momentum and reset traders positions.

We’ve got a long wait until the next major US release – CPI on Thursday, and that gives the markets plenty of time to squeeze higher.

Don’t get me wrong I still think the USD has a long way to go on the topside and Thursday’s CPI will be key to that move, but for now, momentum is waning and there may be a slight hangover from Friday’s NFP result.

Today’s trading (Monday) is going to be pretty light on and we really need to see how the market opens up before we start to think about trading.

Check our Next Best Trades Watchlist for full details as to which specific pairs we are focusing on.

Asian Session

There’s not a lot on the calendar today but one thing of note is the BOJ Meeting Minutes.

We never really expect much out of the BOJ but after Golden Week traders will be gagging for some action.

I feel the Japanese traders will be disappointed and be left to trade the range on the JPY and JPY crosses.

My suggestion – give it a miss!

European Session

It’s a UK bank holiday today and I’m sure Sterling is happy about that after taking a pasting the past week or two.

We do have a good opportunity on EURUSD though with the German Industrial Orders data due. It’s not epic data by any stretch but often when the markets are trending and waiting for direction it can often be an inconsequential data release that moves the market.

Swiss CPI is also scheduled and although it rarely has a major impact, combining it with the German data today we could potentially see EURUSD move!

It’s the only major chance to get some ‘real momentum’ so keep an eye on it.

North American Session

We’ve got a bit of a wait to get some fresh USD momentum with PPI Wednesday and CPI Thursday.

We do have a few FED cronies speaking today, but other than that it’s almost a holiday.

There’s going to be better opportunities later in the week!

Technical Set Up – What’s Happening with the Majors

Check our Daily Analysis for detailed analysis of the Major currency pairs.

Today’s Fundamental Drivers

Plan the Trade, Trade the Plan!

The idea of our “Market Insight” is to give you some guidance with your daily preparation.

Your Daily Analysis needs to become habitual – For full guidance on our daily routine click here.

Make sure you don’t waste unnecessary time in front of the screens.

Remember you need to be fresh, confident and ready to trade and by sitting aimlessly in front of your screens you will become stale and uncertain.

The key to your success: Isolate the opportunities that work for you and focus on them.

Don’t worry about things that you can’t make…..chasing them will only cause problems (tiredness & irrational behavior will take over).

Tune up your charts & get ready to trade…..see you in the Virtual Trading Floors!

Brad